Public Works: Taxing For Transit

Public Works looks at public space, urban design, and city-building innovations from around the world, and considers what Toronto might learn from them.

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Last week, voters in Atlanta, Georgia shot down a proposal that would have implemented a one cent sales tax to fund transportation projects. The plan was defeated by an improbable coalition of the Sierra Club, the NAACP, and the Tea Party, bonded together by a general distrust of politicians and by the populist paranoia that dominates American politics in the 21st century.

However, even though Atlanta voters weren’t inclined to pony up tax dollars to unclog their streets, sales tax as a funding mechanism for transportation infrastructure has been a winner elsewhere.

In 2008 Los Angeles county residents approved Measure R, a half cent sales tax increase to fund transit expansion, highway upgrades, and other transportation improvements over thirty years. The new money has had a galvanizing effect on public transportation, with fourteen new transit projects now in planning or under construction. In November, voters will be asked to decide whether to extend the sales tax until 2069, making it effectively permanent.

While LA is the most well-known example, sales taxes are probably the most common local funding mechanism for transit systems across North America, with municipalities from Denver to New York City using some form of the levy to keep the buses and trains running.

So why not Toronto? The idea has been discussed ad nauseum since at least the middle of David Miller’s last term as mayor. It might even be popular: a poll in April of this year found that 74 per cent of GTA residents would favour a small sales tax increase if the money were funnelled directly to transit.

One problem, of course, is that Toronto is largely subject to provincial whim when it comes to paying for the TTC, with Queen’s Park approval needed for most taxes. The City’s perpetual fiscal crunch was to have been mitigated with the 2006 City of Toronto Act, which gave our municipal government access to new “revenue tools.” It enabled City Hall to create the land transfer tax and the (since rescinded) vehicle registration tax, which bumped up our operating revenues and helped address systematic imbalances in the annual budget cycle, but doesn’t generate the kind of money we need for subways.

Back in 2009, then-Municipal Affairs Minister Jim Watson slapped down a municipal sales tax proposal from uppity budget chief Shelley Carroll, advising that the province had no intention of giving up its monopoly on point-of-purchase shakedowns, and possibly inspiring some under-the-breath “you’re the revenue tool!” muttering from Carroll.

Even the ambitious and ultimately doomed OneCity transit plan floated by TTC Chair Karen Stintz (Ward 16, Eglinton-Lawrence) and Vice Chair Glenn De Baeremaeker (Ward 38, Scarborough Centre) back in June relied on property tax adjustments rather than a sales tax for funding. Property tax is a sensitive issue in Mayor Ford’s Toronto, many councillors (including Carroll, and colleagues on both the left and right of the spectrum) expressed concerns about using it to fund transit, and OneCity never even made it to council floor, with the tax proposal the first piece to be shelved.

If a special property tax hike is off the table, we need money from somewhere else. Actually, we need it from a variety of somewhere elses, and given the dollars required, that will have to include a new sales tax. Just because it hasn’t been done, doesn’t mean it can’t be done, and with the GTA expected to add 2.8 million people in the next 25 years, something will have to be done.

Regional transit agency Metrolinx is due to release its study of revenue tools that could fund transit expansion in Toronto and other municipalities next year. Last month, city council decided to try to form a working group with Metrolinx and those municipalities, so that cities could provide input into that suite of funding options. When they hold their meetings, we hope that the idea of a sales tax is finally given the consideration it warrants. It’s time for somebody to pick up this idea and run with it.